Chapter 11: Current Liabilities and Payroll

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Name___________________________ Date____________________________ Lab #4 - Chapter 11 1) On December 1, Boston Pizza borrowed $40,000 from the bank, issuing a 90-day, 15 percent promissory note. Interest is in addition to the face value. In the journal provided, prepare Boston Pizza's December 1 entry, December 31 adjusting entry for accrued interest, and March 1 entry at maturity. Bound to the nearest whole dollar. General Journal Date Account P Debit Credit R Dec 1 Dec 31 Mar 1 2) Anson's Auto Parts had cash sales of $10,000 for the month of April. Sales are subject to a 6.5 percent sales tax and an 8 percent excise tax. In the journal provided, prepare a compound entry to record Anson' Auto Parts sales and excise taxes for the month. General Journal Date Account P Debit Credit R Apr 30 3) Dougan Company manufactures and sells widgets. Each widget costs $60 and sells for $100. Each widget carries a warranty that provides for free replacement if it fails for any reason during the next 36 months. In the past, 4 percent of the widgets have had to be replaced under the warranty. During May, Dougan sold 2,000 widgets and replaced 150 under warranty. Calculate the product warranty expense for the month. Show your computation. 4) The payroll register of for Bennett Corporation contained the following totals at the of August: Wages.......................................................................... $140,125 Federal income taxes withheld................................ 35,872 State income taxes withheld.................................... 5,605 Social security tax withheld...................................... 8,626 Medicare tax withheld.............................................. 2,032 Employee medical insurance deductions............... 4,800 Wages subject to unemployment taxes................. 90,360 Prepare entries in journal form to record the (1) monthly payroll and (2) employer payroll expenses, assuming Social Security and Medicare taxes equal to the amount for employees, a federal unemployment insurance tax of 0.8 percent, a state unemployment tax of 5.4 percent, and medical insurance premiums for which the employer pays 80 percent of the cost. General Journal Account P R Debit Credit (1) (2) 5) Calculate answers to the following questions using future value and/or present value tables. a. Tally purchased machinery by executing a $30,000 non-interest bearing note due in four years. For how much should the machinery be recorded, assuming that the going rate for similar notes is 6 percent? b. Mindy Kwon is making bank deposits of $3,000 at the end of each year for five years, for purposes of buying a car. Assuming an interest rate of 7%, how expensive a car will she be able to purchase? c. To how much will $2,000 grow, assuming it is invested for 3 years, with interest of 8 percent, compounded quarterly? d. Liz Astor would like to make a lump-sum deposit today so that she can withdraw $10,000 at the end of each year for the next three years. Assuming a 9 percent interest rate, what should she invest today